< Back to front page Text size +

The end of the "death tax": dangerous for your health?

Posted by Christopher Shea  February 20, 2009 10:59 AM

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

The angel of death

In this grim economy, it's hard to find a good investment, but a Kennedy School economist has a tip for you: any company that makes technology used in intensive-care units.

The reason, explains Jeffrey Frankel, who served on the Council of Economic Advisers under President Clinton, has to do with the estate tax -- more precisely, what is slated to happen to the tax, which falls on the holdings of the wealthiest Americans after they die, over the next two years.

Under President Bush, the Republicans abolished the estate tax, full-stop, effective in 2010: However large your estate, you will be able to pass it on to your heirs without the government taking a bite. To minimize the effect of the tax cut on long-term budget forecasts, however, Republicans eliminated the estate tax for 2010 only. Without new legislation, it will come back from the grave in 2011.

With Democrats now in charge of Congress and the Presidency, an extension of the cut into perpetuity appears unlikely. However, given the recession, Congress also seems unlikely to "raise" taxes by restoring the estate tax for 2010.

Therefore, as things stand now, potential heirs stand to gain tremendously if their parents hang on until 2010 but do not survive that year.

In 2010, heirs will face an incentive to let their parents pass away. But for now the economic logic points to helping them survive past Dec. 31. "Six years ago , I used to say this as a joke," Frankel writes. "It was widely assumed that this absurdity in the tax law would be fixed."

But now, he writes, "tax-motivated ICU production in 2009 seems a serious proposition."

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

About brainiac Brainiac is the daily blog of the Globe's Sunday Ideas section, covering news and delights from the worlds of art, science, literature, history, design, and more. You can follow us on Twitter @GlobeIdeas.
Brainiac blogger Kevin Hartnett is a writer in Columbia, South Carolina. He can be reached here.

Leon Neyfakh is the staff writer for Ideas. Amanda Katz is the deputy Ideas editor. Stephen Heuser is the Ideas editor.

Guest blogger Simon Waxman is Managing Editor of Boston Review and has written for WBUR, Alternet, McSweeney's, Jacobin, and others.

Guest blogger Elizabeth Manus is a writer living in New York City. She has been a book review editor at the Boston Phoenix, and a columnist for The New York Observer and Metro.

Guest blogger Sarah Laskow is a freelance writer and editor in New York City. She edits Smithsonian's SmartNews blog and has contributed to Salon, Good, The American Prospect, Bloomberg News, and other publications.

Guest blogger Joshua Glenn is a Boston-based writer, publisher, and freelance semiotician. He was the original Brainiac blogger, and is currently editor of the blog HiLobrow, publisher of a series of Radium Age science fiction novels, and co-author/co-editor of several books, including the story collection "Significant Objects" and the kids' field guide to life "Unbored."

Guest blogger Ruth Graham is a freelance journalist in New Hampshire, and a frequent Ideas contributor. She is a former features editor for the New York Sun, and has written for publications including Slate and the Wall Street Journal.

Joshua Rothman is a graduate student and Teaching Fellow in the Harvard English department, and an Instructor in Public Policy at the Harvard Kennedy School of Government. He teaches novels and political writing.


Browse this blog

by category